Grupo Catalana Occidente, S.A. (GCO) Earnings Call Transcript & Summary

Good morning, this is Hugo Serra, CEO of GCO. It is a pleasure to be with all of you this morning to tell you about the 2022 year, which we just published this very morning as well as to share expectations for the current year, and in order to answer any questions that you may have. In the absence of Francisco Arregui, who, as you know, and he announced in the last presentation of results, he retired recently. And I use this opportunity to thank him for his huge contributions to the group. And I would like to present Clara Gómez, recently appointed CFO and risk manager as well; and also Carlos Gonzalez, CFO, who you very well know. And after a brief summary, I will pass the floor over to them for them to cover the main keys of the period. First of all, I would like to refer to the press conference, the press release yesterday of the new brand Occident. As we have said in previous presentations, we are in the midst of a unification process of the companies of the traditional business with the goal of becoming a more agile company prepared to adapt to a rapidly changing environment, an environment which is changing increasingly swiftly. So we have decided to create a new brand, which summarizes the efforts of Catalana Occidente Seguros, Plus Ultra Seguros, Seguros Bilbao, NorteHispana Seguros. It represent our brand, our past, and it presents advantages in terms of feasibility and ease of writing an increasingly more digital world. It works well in any language, and it maintains a logo and the color. So we maintain brand recognition that has taken so long for us to build and consolidate. So we don't revolutionize, we evolve, which is quite along our lines. Our desire is for Occidente to continue to be a synonym of trust, closeness and professionalism for all of our customers. About our 3 pillars: growth; profitability; and solvency. I will just make a few comments now about the main keys of the 2022 year in terms of organic growth, I would like to stress the notable growth in traditional business and very exceptionally in credit insurance, over 5 billion premiums, which in corporate terms is quite a landmark. In inorganic terms, we already announced the acquisition of 100% of Mayor group for around EUR 400 million, approximately. And after the authorizations, the purchase was made effective on the 9th of January, and the group will become a leader in the funerary industry in the Peninsula. In terms of profitability, our consolidated result improved by 16%, EUR 542.6 million, after an improvement of the ordinary results, both in traditional business and very strikingly, in credit insurance. The increase will be lower than that of previous quarters, but there are several nonrecurring effects that will be covered in detail, amongst which I would like to stress the release of the mathematical provision due to the increase of the interest rate's curve and in a positive sense, of course. The anticipation of the systematic provision for funeral insurance that will benefit us in future years, and also the announced plan of voluntary dismissal with a provision of EUR 120 million gross, which will become EUR 90 million net. In terms of solvency, the impacts in -- of the market as a consequence of the war in Ukraine and inflation have an impact on our permanent resources. But despite that, our solvency ratio improves, which goes from EUR 220 million to EUR 240 million. Although the incorporation of Mémora, will reduce that somewhat. And this will be talked about in detail later. In terms of shareholder remuneration, our dividend increases by 8.7%, continuing with our traditional policy of stable and growing remuneration. And after these brief introductory comments, I will pass the floor over to Clara Gomez.

Good morning. Thank you. As the CEO already said, I'm Clara Gomez, General Director for Risk and Finance in the Group. And it is a pleasure for me to be with you here in this presentation of results and future presentation of results. And I trust I will be as -- I will be as clear and rigorous as Francisco Arregui over the past years. And as always, you know that Carlos Gonzalez is here with me, CFO of the Group; and Nawal Rim, Investor Relations manager, who will rip together all of the questions that you will make throughout the presentation, and we will answer them in a group manner at the end of the presentation. And of course, I would like to thank everyone who is with us online today, and I would like to thank you for the interest you've shown in the performance of our business and the performance of our share. Starting with the evolution of the business and after the executive summary already given to us by the CEO, I will give you the main keys and trends of the period. To the start after the exceptional character of the years 2020 and 2021 due to the pandemic crisis, 2022 seemed that it would be the year of recovery of the crisis, social, economic and health care crisis goes by COVID. But 2022 was also a complex year, marked by many factors such as the Russia-Ukraine conflict that has progressed throughout the entire year and a consolidation of inflation, which was predicted as more context base, but it stayed throughout the year, and it seems like it will be with us even if in a more contained manner through 2023. You can see it in the main keys and trends of the period or 3 lines and key pillars. I will not to talk about it because it has already been mentioned in the executive summary. But in terms of growth, we overcome 7.4% with a milestone of EUR 5 billion premiums, EUR 5.245 billion and additional yield within our strategic framework of growth, we have advanced in our successful track record of inorganic growth through the acquisition after the year-end of 100% of Mémora owned by Ontario Teacher's Pension Fund, on February 9, 2023, fund amount of EUR 401 million. In the pillar of profitability, we could only defined 2022 as satisfactory or very satisfactory with the consolidated result of EUR 542.6 million, and with a growth of almost 16%. Truth is that the growth is due to the good performance of the traditional business, extending to all of the entities and business units of the group's, despite the fact that it was affected by weather events and the inflation effect both in multi-risk and motor. As the CFO will tell you about later. And in the credit business, we have had a year that I would define as exceptional. But by a claim's ratio still below the situation before the pandemic. In the solvency pillar and even if we will give you more detail later. Well, it also confirms our robust position, which allows us to face future challenges. We closed the year with a solvency ratio of 240%, 20 points above that of the previous year. And all of that has also been ratified by rating agencies, who grant us an A with stable outlook in the vis-a-vis investment, but it even improves in credit operational units, maintaining A2, but with a positive outlook instead of stable. After having explained the keys of the periods, just a brief -- a few brief comments about the situation of the global economic environment, especially in the areas that may have greatest impact in the evolution of the business. Regarding the environment and without getting into details about everything that we already said, Russia-Ukraine, uncertainty. 2022 ended with a deceleration, but with positive growth both in U.S. and the Eurozone, with a better behavior of win with this 5.2% at the end of 2022 as compared to our European peers, better than our European years. But the focus for 2023 has corrected downwards as the year has evolved, although we have overcome the most pessimistic focus that pointed towards a technical recession in some of the countries of the Eurozone. And regarding Spain and in agreement with the latest forecast of the International Monetary Fund of January, we expect growth slightly above 1%. Above that of the Eurozone that as you can see, does not even reach 1% that we established in Spain. Regarding the markets and after many years, of abnormally low interest rates, the financial policies of Central Bank corrective of inflation have produced a sustained increase of interest rates, mainly during the second half of the year, and it is expectable for them to be sustained during 2022. Especially the Spanish 10-year bond. If you look at the left-hand side, it closed at 3.7% when we came from negative rates in almost all of the sections of the -- stock markets have been marked by the destabilization. You can see at the bottom with significant drops in the main indexes, but also with some recovery in the first few months of 2023. And if we start with the insurance industry in Spain and its performance, in the years of rises the entire sector decreased in terms of premiums, and there is a growth this year in all lines of business in Life, 3.7% that you can see on the right-hand side of the screen and 5.2% in non-Life. Even in lines of business, where growth is traditionally more difficult with such a competitive environment as that of the motor business in Spain. The multi-risk business also rose by 5.7%. As you can see on screen as per the ICEA data at December end 2022. And starting now with GCO. On screen, you have to summarize income statements. In terms of turnover, 7.4% growth, slightly above the industry, especially in recurring premium that you can see on screen, 5.4% and 15.4% in the credit insurance business, mainly as a consequence of the increase in commercial activities and the inflation effect. The drop in single premiums that you can see on screen, these are the premiums that contribute less value is due to a one-off transaction during 2021 that has not repeated in 2022. At any rate, the CFO will give you more detail about the evolution of turnover in each of the lines of business throughout the presentation. Regarding results, I will give you a brief overview in the summarized slide that then Carlos Gonzalez will give us more detail about, an increase by 15.9%, almost 14% in the attributed result with EUR 487 million. And the results of the traditional business, we see an increase of 7.5%. You will see this translates into a reduction in motor certainly due to the recuperation of mobility after COVID, but we still have better results than the ones we had before the pandemic crisis in 2019. And a reduction in the multi-risk business due to weather events that despite being similar to the ones in the previous year, they have different impacts, and we will give you more detail later. There was less participation of the insurance compensation consortium and reinsurance. And in Life, we can only define the results very satisfactory, both in terms of risk and savings. In this case, this is also a consequence of the increase in interest rates, the recovery of interest rates. In credit insurance, as we've said in previous presentations, we have a system a very cautious provisioning system that we maintained. Last year, we also had the stake of reinsurance due to the government agreements of the beginning of the economic crisis that allowed for the credit business to continue to contribute to international trade. And despite all of that, the credit insurance business has experienced results that we can only define as very positive with a growth of 46.7% motivated by a claims ratio, which is still below the pre-pandemic levels and with a notable increase of trade activities leading to turnover. In this presentation, because of its relevant and despite the fact that Hugo Serra already mentioned it, you can see here the importance of nonordinary results. And I will not get into detail of those because we will tell you in more detail later, but it's due that the negative impact that you can see on screen, and that is different from what we showed in previous results is mainly due to the effect of the voluntary dismissal plan that we also mentioned for an amount of EUR 90 million. And in a lower amount, also the complementary payment to compensate inflation of -- in employees. As to the makeup of our business, you know it very well. We have a very diversified portfolio between traditional and credit business and also very balanced between the different products and lines of business. You can see the balance between motor and multi-risk, and our international presence focuses on credit insurance, and Spain represents the largest stake. We also consolidate our position as fourth largest insurance group in Spain. And in sustainability, you know that in the group, we have a basic strategic pillar, our long-term vision. And of course, sustainability is an intrinsic part of this. But it is also true that in the past few years, we've carried out a notable adaptation that involved and will continue to involve the entire organization, and it is framed within our 2020, 2023 sustainability plan. I wanted to talk about some milestones of this year in sustainability, our group adheres to the world compact guidance, and we are sustainable of PSI and PRI. And during 2022, we have taken an additional step forward, and we have joined the insurance alliance for -- the net 0 insurance alliance. And in terms of financial investment, we had -- we have led the portfolio to sustainable criteria of those in Article 8 of SFDR and rating agencies have acknowledged all of this. You can see here the sustainability rating. They have reviewed steadily rating and granted us 15 points, which means an improvement of 0.5 versus the previous year. And we are within the top 15 entities of the insurance business among the 300 companies that they rate. And on the left-hand side of this slide, you can see that we have received the ESG industry top-rated stamp. On the website of the group, you have all of the documentation of sustainability, policies, annual sustainable investment plan and all of the milestones that we just briefly summarized are reflected on the website. And in the last presentation, we already told you about the acquisition of the Mémora Group, which was still pending the authorization of the antitrust authority. And due to the relevant level communication that we acquired on February 9, 100% of the Mémora Group, which belong to the Ontario Teacher's Pension Fund amount of EUR 401 million. The resulting group will reach premiums. You can see on the screen 2021, the latest figures we have EUR 217 million after incorporating our Assist business and our EBIT and an EBITDA of EUR 53 million. It has -- it makes clear strategic sense in the feed -- in our funeral business, making us clear leaders, and we are very satisfied that we have acquired now effectively 100% of the Mémora Group in GCO. Regarding the share price performance, it's better than ourselves very good in the long-term, better than the reference indexes from 2002 to 2023, you can see it on the screen with a growth of 11.72%. At year-end, just like the rest of the stock market, there was a drop with this 1.5% that you can see on screen, but slightly better than Ebix and euro stocks insurance. Regarding our dividend payout policy, with very well because it has been explained in detail in previous presentations, it is a dividend stable, dividend payout strategy with a clear commitment of the group towards shareholder remuneration that we've maintained even during crisis years. In 2021, we had a total dividend of EUR 113.6 million. And in 2022, the 3 first dividends that were technically charged to reserves have increased by 7.5% versus the dividend of the previous year. Additionally, we foresee an increase of 10% in the complementary dividend that will be paid in May. The Board of Directors yesterday proposed to present to the AGM, this complementary dividend increase with a total of EUR 123.42 million total, an increase of 4.87% as compared to the previous year. And without further ado, I'll pass it over to Carlos Gonzalez, CFO of the group, who will tell you in more detail about the evolution of the year, main indicators and broken down by different lines of business.

Good morning. As Clara very well said. I will tell you in a bit more detail about the evolution of businesses, both traditional and credit insurance and amongst those main lines of each. We'll start with the traditional business. I would like to mention again our diversification of products and the high customer retention has allowed us to maintain an important growth in turnover with an increase in recurring premiums of 5.4%, amounting to EUR 2.6 billion. And we should stress here the growth of 7.3% in multi-risk and 8.5% in miscellaneous. In terms of results, the technical result grows by 2.1%, and in general insurance, the combined ratio continues to be at around 90%, specifically, 90.8% despite having increased by 1.9 points, both because of the behavior of multi-risk and motor that we already mentioned. On the other hand, the favorable evolution of the technical financial result of Life continues with a growth of more than 50%. And now the different lines of business, multi-risk fairs with 774 million in premiums, still a significant growth of 7.3%, better than the market, which is at around 5.7%. And here, what we see is a strong growth of premiums in the -- most lines as a result of good customer retention and a good evolution of the average premium, which has had the partial impact of the cost of claims. The combined ratio is at 92.8%, 2.7 points above the previous year as a consequence of different combined impacts related mainly to the increase of claims costs due to inflation the fact that there were several key events in industrial lines and also the weather events that despite being similar to previous years, in this past half year, numerous small intensity events have happened, which have not been covered in the same way by the insurance compensation consortium. As a result for multi-risk, the result has dropped by 22.6%, up to EUR 54 million. In motor, we have an acceleration of growth with an increase in turnover of 2.7%, up to EUR 658.6 million, in line with the sector, which is growing by 3.3%. Here, we can see a relaxation of the competitive price environment. And in our case, commercial activity, which has allowed us to grow in a number of customers. The combined ratio is at 92.7% below the ratios of 2019, which could be a good reference. We were at 94%. But if we compare to 2021, we've seen an increase of 3.4 points as compared to that year. Of course, in 2021, we must remember that we still have the effect the lack of mobility due to COVID especially during the first quarter. It is also true, we must remember that part of this increases, this 3.4 points derived from the cost of claims due to the inflation effects. And in the end, in motor, we reached EUR 47.7 million, which doesn't compare well with 2021, but it does compare much better with years before COVID, where we were around EUR 30 million, EUR 40 million in that range. In the other line, we have an increase in premiums by 8.5% due to the general improvement of the economy. Remember that the GDP has increased 5.6% in Spain in 2022. And in terms of results, other maintains excellent levels of combined ratio. With these levels slightly below 83% and technical results of 58.5%, even above that of 2021. For Life, as for Life, we continue with the growth in recurring premiums, Life [indiscernible] product savings took of around 4.5%, and we should remember that these lines are the ones that contribute most of our margin. In terms of results, the technical financial result improves by 53.2%, amounting to [ 50.4% ] -- [ EUR 50.4 ] million with a combined ratio for health of 87.4%, funeral 80.8%. These lines together make a significant contribution of the technical financial result. And we also see an improvement of the contribution to the financial margin, which in the end complements these very relevant increase in Life results. Also, and in order to be fair, we should remember that in 2021, Life results were penalized by the mortality tables and other regulatory impacts that have not taken place this year. As a summary for the traditional business, the increase in turnover is 5.4% that we mentioned and the maintenance of the profitability of other and Life as well as the significant improvement of the financial result that I just mentioned allows to offset the normalization of motor results and the drop in other -- in multi-risk. So a total increase of 7.5% of ordinary result, EUR [ 362.6 ] million. And we also mentioned that the result is conditioned -- the final result is impacted by the nonrecurring movements, especially the voluntary dismissal plan, which has an impact -- a net impact of EUR 90 million in the accounts. And now on to credit insurance. In this line of business, acquired -- or earned premiums reached a volume of EUR 2.24 billion, with a very important growth of 17.1%, basically due to the good evolution of activities of our customers, mainly because of the impacts of inflation rather under turnover, there's also greater trade activity, although this is selective, and therefore, it does not have such a great impact on this growth. On the other hand, there's still downward pressure in renewal prices, despite the fact that risk perception has increased, and we believe that this perception of greater risk will allow us or will have a positive impact in renewals of 2023, vis-a-vis the technical result of the business, it continues to improve with a growth of 32.6% amounting to EUR 410.6 million. As a consequence, on the one hand of the low claim's ratio, we still see and mainly the cancellation in 2021 of the reinsurance agreements with the government. All of that allows for an increase of results of 46.7%, amounting to EUR 354.6 million, you can see on the screen. Regarding geographical distribution, nothing to stress here, the improvement in the rate of income is very positive. We would like to stress the Americas with this increase of 43%. We must acknowledge and say that it has been positively impacted by the exchange rate and the somewhat smaller growth in Spain with 12.1%, as you can see, is quite vigorous as well. I would also like to mention at any rate, the drop in turnover in Russia and Ukraine. This is not feasible in the growth of Central and Northern Europe, where they are located because these areas, Russia and Ukraine have a relative weight, which is very, very low. And now on to the profitability of the business. The gross combined ratio continues evolving positively with a ratio of 72.3%. And the relevant improving turnover helps us with the expense ratio and the claims ratio increases up to 38.7%. And despite the fact that the number of claims increases, this is mainly a consequence of the low starting level where we started in previous years -- based on previous years. And we must acknowledge and mention that we still find claim ratios below those before the pandemic and claims ratio that are between 4 and 5 points below those pre-COVID. I would also like to mention that we continue with our cautious provisioning and rating or tariffs criteria, exposure to risk, an increase of 19.1%, in line with the increase of turnover of current customers. And at this point, I would like to say again that we are maintaining our strict selection criteria vis-a-vis the institution in Russia, our exposure in the area has dropped notably being now around 0.4% of our total risk exposure, so a marginal percentage and focusing on local commercial experts. And as a summary and to finish my presentation, I would like to go through the drivers of the year in the credit insurance business. Income has increased notably basically due to the increase of turnover of our policyholders mainly due to the recovery of the economy, but also inflation, technical result before reinsurance has improved with a moderate claims and expenses. We maintain our cautious provisioning policy as to reinsurance, the result improves not only because in the first half year of 2021, we still maintained the government agreement. And in this year, we maintain exclusively 37% transferred to the usual reinsurance panel. And the financial result also improved by EUR 27 million, basically as a consequence of reinvestment of short-term reimbursement, fixed term liquidity to new interest rates in the market, which, as you know, have increased during the 2022 year. And to a lesser extent, the financial result is due to the result of associated companies and the favorable impact of rates. So the result in the end is EUR 354.6 million, ordinary result with an increase of almost 50%, as mentioned. And that would be all for me. Clara?

As in previous presentations, we will now talk about the evolution of the capital insolvency of the group. On screen, you see the evolution of own resources that at market value that is incorporating all of the capital gains of the properties that are not included in the balance sheet for an amount of EUR 542 million amounts to EUR 4.96 million. And it is true that it drops by 5.3% as compared to permanent resources at market value on the previous year, but this is, as you know, and as we've mentioned, due to the evolution of interest rates, which has had an impact in the valuation of fixed income and the evolution of variable income, and as a whole leads to capital losses of almost EUR 720 million, all of those net of tax and accounting asymmetries. With all of that, the evolution of permanent research asset market value that we show on the right-hand side can only be defined as extraordinary, has multiplied times 15 since the beginning of the 2000, and all of these as a consequence mainly of the evolution of the results of the group through the years. The dividend payout policy that we maintain, and all of that has allowed for the expansion of the group via corporate transactions that you very well know. I would like to stress on this slide that as you know that on January 1, 2023, the new international regulation came into work force, it impacts provisions and financial investments of the group as listed company, and it is known as IFRS 16, IFRS -- and IFRS 9, respectively. The new international regulation will affect the property of the group, the equity of the group, and we wanted to mention in this presentation, our main equity impacts. They are all assess as per premium resources of 31st December 2021. The amount that you can see on screen at EUR 4.182 billion at 31 December 2022. And the first transition balance sheet is 31 December 2021. Before we start with these equity figures, I would like to give you some context about the regulation. With the business of the group, it does not impact in the same way of the different lines of business. As you can see on this screen on the right-hand side, we see it has mainly an impact on valuation of credit provisions. And we have opted for the general provisioning methodology established by the regulation. It is the building block approach, all of this to maintain the same accounting treatment to all products in countries where trade is operate. And in the traditional business, it affects mainly long-term business, which, as you know, is referring to Life Savings. From the group, we have a very good appreciation of the long-term accounting aligned with our pillars with the same transparency in homogeneity. Summarizing the new accounting method into these changes for Life Savings, mathematical provisions will be assessed in an analogous manner to what we've been doing until now in solvency, and we detailed this in all of the solvency reports published every year, and it impacts credit insurance business and savings business. One of the novelties of the new regulation that will provide more transparency is that we will calculate the future forecasted profit based on the current portfolio, it will be cost. And it also has impact on variable income, all of the capital gains and losses will not be included in the P&L. And in case of mutual funds, contrary to what we just said about variable income, they will -- all of the capital gains and capital losses will be introduced in the P&L. And this is why in December 2022, we analyze part of our mutual funds portfolio to mitigate the effects of the accounting regulation. The accounting standards to get into force shortly. It is just a change in the vehicle by which we invest and not the way in which we invest. And it has an impact on our equity as compared to the figure that we just gave you for 2021, you can see on screen that we feel very comfortable with the equity impact because it is fairly material. The negative effects on the equity, EUR 250 million in traditional business, mainly in Life Savings as a consequence of valuing the provisions at market value instead of the current interest rates. And I would like to remind you that the interest rate situation of 2021 is not the same as the current one. And it gives us this negative equity impact of EUR 250 million, which, even in an isolated fashion, barely has an impact on the EUR 4.668 billion that we had in December 2021. But it is also offset with the equity impact that we expect in the credit business, which is estimated to be a positive to EUR 130 million, as a consequence of valuing the provisions a best estimate. And as we've said throughout all of our presentations, our cautious and conservative provisioning policy. With that and due to the diversification of our business, the impact on the equity should not be material with this data that we have provided of the 2021 year in the area of around EUR 20 million without upwards or downwards changes estimated at below 2%. We do not estimate changes or impacts in our risk appetite, evolution of the business, dividend payout or the solvency position. And we will maintain all of the indicators parallel to the new ones with the new international accounting standards. We will maintain both sets of indicators. On screen, you can see regarding solvency that we closed the year 2021 with a solvency of 240% at the level of the group and that in 2022, there is an increase of 20 percentile points as compared to the previous year. We are at a solvency of 240%, better than most of our competitors and our own funds are off top credit quality more than 90% of those are Tier 1. And in women with all of these stress tests, adverse scenarios that we carry throughout the year that we also published in the financial and solvency situation report. Our solvency would be -- would never be below 200%. So it is a solvency that allows us to face any situations in the future. You know that all of the solvency details will be provided in the financial and solvency institution report, which will be published in May for the group and April for the rest of the entities. And as per all of that, we said, the credit -- the rating agencies acknowledge the solidity robustness of our business. And in the case of AM Best for entities of the group, they give us an A rating. And as we said at the beginning of the presentation, they confirm -- Moody's confirms A2, but we go from stable to positive outlook. And just to finish here on screen, you have the poll situation of our investments, close to EUR 15 billion funds, EUR 14.91 billion with a drop of 4.6% compared to fund at the end of 2021 due to the evolution of interest rates and the stock market evolution, I will not at each of the investment lines. Well you know that we maintain a conservative investment policy. Our top asset is fixed income, representing more than 50% of our investment with almost EUR 7 billion fixed income with a very strong treasury position that has allowed us on February 9 to acquire 100% of the Mémora Group, as we already mentioned. And we will finish this presentation. And as on previous occasions, we will now answer the questions made during the presentation, and I know that there have been many questions. So first, I would like to thank you for your interest. Nawal Rim has grouped all of the questions made. In some cases, they will be -- in some of the cases, they will be answered in a pooled manner, and you know that if any other questions remain unanswered, you can address the Investor Relations department, and we will answer for the usual channels. Thank you very much. Okay. Good. So we will start now with the Q&A session.

The first question refers to the main lines of traditional business. The past few years have been very special. In motor and multi-risk, we -- you continue with a combined ratio below the sector. With the inflation environment, should we foresee greatest impairment of these ratios? If you'll allow me since this is linked to comments that I made before, I'll answer that question. In multi-risk, we've already mentioned that the combined ratio has been 92.8%, which compares very favorably as you say with the ratio of the business -- the sector, but it is true that there's been an increase of 2.7 points. And I already mentioned the main reasons for the increase, but I will elaborate a bit more. First, inflation, despite having a repair network that helps us control costs. Part of this inflation has been transferred to a higher cost of claims. And if inflation is contained during 2023, we do not expect a ratio increase of the average cost of claims. Secondly, weather events. And we already mentioned this. This has been a year with quite many weather events and despite the fact that they were similar to the previous year, they have had a different impact in the P&L, greatest -- greater impact. And this is mainly due to the fact that these weather events have happened in geographical areas and -- different geographical areas, and they have been of a different technology. These weather events have been less intense, but longer in duration, and this causes a lower participation of the insurance compensation consortium. I would like to remind you that we have a mitigation element for these type of risks, which is the reinsurance contracts that are specific for weather events or major events. Finally, as to the increase of claims ratio in multi-risk, we've had some one-off claims that have worsened the combined ratio, mainly in industrial multi-risk. But here, just like we mentioned, for nature events, we also have reinsurance contracts that protect us from these claims that are more severe. As to the motor line, it is aligning with the sectorial margin is easily narrowed in unfavorable macro situations set as the one driving in current times, you know how competitive motor is within the Spanish insurance sector. We have experienced a normalization of the combined ratio due to the return to 100% normal circulation, normal traffic. But it is also true that there has been an inflation that has had an impact on the average claim cost. We still have a combined ratio well below the industry, more than 5 points. We are at 92.7%, the sector at 98.4%. And these better combined ratio, I think, is not only due to the use of our repair or our workshop network, but also due to the quality of the risks we underwrite. And the cost shows and conservative tariff and rate policy, and this will continue in this year. And we can conclude, or we can expect a good year for 2023, both in multi-risk with more contained inflation and motor despite the fact or bearing in mind that in 2023, we will continue to the normal situation or loan movement situation or traffic. And as I mentioned before, we are optimistic vis-a-vis 2023 results. It is also true that results will be conditioned by the economic environment and competition. Thank you, Carlos. We'll now continue with a question about credit insurance business. The past few years have been very special for credit insurance. After very good years, COVID hit, and then the Russia-Ukraine conflict and after a year with an excellent result, what is the forecast for 2023?

Well, you've already seen the evolution of the credit business in 2022 with a growth above 15% in turnover and more than EUR 350 million ordinary result. But it is true that the last -- the past few years have been very atypical with the social and economic crisis really to COVID, which led to a lot of uncertainty in all businesses, but more particularly in credit insurance. And despite the complete closure of the economy in 2020, the 2020 year ended with a combined ratio of 94%. Many factors contributed to this. On the one hand, the signing of government agreements, the support measures to the general economy that were adopted by governments and central banks and also our cautious risk management policy. And with that, in a year, which was a completely atypical year, we continue to contribute to international trade and economic activities, and we obtained modest but satisfactory results. Expansion policies of central banks and of all governments that started during the crisis have maintained economy claim ratio levels were completely abnormally. You know this from previous presentations. 2021 ended with a combined ratio of 64%. And truth is that in this first half year of 2022, we did not yet see a normal inflow of claims even in the second half year of 2022 we slowly but surely, so a normalization of the situation. And finally, we closed a year with a combined ratio of 72%. So in the end, the credit insurance business, as you -- as you very well know, is very much linked to the economic cycle. It's difficult to forecast how it will behave this 2023 that already started, but the truth is that if there are no extreme turns of the economy, everything points towards the fact that the change towards restrictive economic policies and contingent -- inflation contingent measures and the modest growth of the economy that, as you very well know, and we presented at the beginning of the presentation and were forecasted by the IMF suggest that we will probably go to ratios similar to those before the pandemic rather than 2021 and 2022. The inflation has also caused an important increase in premiums that has been explained in detail, both in premiums and need to potential exposure and our premiums have grown above average of previous years by 15%. So in as much as this inflation becomes contained and it drops you in 2022, our growth in premiums linked to our growth in [ TPE ] will be more contained. And I would also like to stress that as we already insisted a bond, the group maintained a very cautious provisioning policy and [ exhaustive ] risk prevention policy. We're very comfortable with our risk exposure, which is very well diversified, not only by geographical area, but also by sector. And out of all of this, well, you have a lot more detail at the end of this presentation in the annexes, where you have all the details of the TPE by geographical areas and sectors.

Well, as was to be expected, we have received many questions about the nonrecurring results. We will group them as follows. This year, the nonrecurrent item is significantly higher in terms of negative results as compared to previous years. Can you give us more information about what this item includes and whether it will happen in 2023?

Yes, it's true that this year, the nonrecurring results increases notably. We have showed that on screen. We have -- but Carlos, myself -- and myself have explained in a summarized manner the positive and negative impact, but it is true that it deserves some more elaboration. On the one hand, in the traditional business, the minus EUR 50 million that we have seen on screen come from basically, the EUR 90 million net of tax provision for the voluntary dismissal plan that the CEO already told us about in his initial presentation. This is a one-off. We do not expect this to repeat in 2023 because we have provisioned these fully, despite the fact that the duration of that plan is planned to be 2 years. And to a lesser amount with a negative character, I would like to remind you that we have paid a complementary payment, a complementary salary for all employees of traditional and credit business to offset inflation. There are positive impact that offset part of the negative impact that we have seen that we have mentioned here. On the one hand, after extraordinarily low interest rate situation. The group made an effort to provision in Life Savings to adapt to that situation of extraordinary low rates situation and the increase of rates throughout this year, especially during the second half year of 2022 has made us release some of the provisions that we had made in previous years. And also with the aim of reducing volatility in the P&L account due to the new international regulation, due to the [indiscernible] of mutual funds. We have realized part of our funds in traditional and credit business. And finally, one specificity of the funeral business with the technical character in the nontechnical result, we see nonrecurrent results in funeral. And this is because we have anticipated future provisions of all products that we had been dragging from the previous business provision that merged with NorteHispana. And this will allow us to be safe from in future years. And credit insurance, nonordinary, nonrecurring results have a lower magnitude than what we've seen until now in traditional. There have been several impacts on those diverse that have offset one another. On the one hand, we have valued at market value, all of the assets and liabilities of the trade subsidiary in Russia. And on the other hand, in the field of financial investment. We've made realizations, both of fixed rate and as I already mentioned in the same answer in mutual funds because just like the traditional business, the goal was to reduce volatility that these cause in the P&L under international accounting standards. So I hope I give you a remission in detail about nonrecurrent is minus EUR 75 million. But if you have any further questions, you can ask the Investor Relations department.

Regarding the new IFRS 17 accounting standard, there are several questions. The impact of IFRS 17 explained in the report are very limited. Can you give us more detail about these many companies have presented a report on the impact of the new IFRS 17 accounting standard in the financial standards -- financial states? Will you make any presentation about that?

Yes, at the end of 2022 is the first time we are giving figures of the new international standard. It is a complex standard and actuarial technical aspects underline the entire sector has worked very thoroughly over the past few years, all of the teams of the group have been involved mainly financial, but also IT, actuarial investments. I will not repeat in what businesses, we expect greatest impact we have said so in the presentation, but you've been able to see that from the point of view of equity, we are very reassured and comfortable. We do not expect any significant impact on our equity. The negative impact on equity due to the appraisal market value of Life Savings will be offset by the positive impact in the credit insurance business due to the fact that we will assess provisions at best estimate. It does not affect all of the lines business, or it does not affect -- it does not have a material impact among lines, multi-risk, motor and multi-risk and most of Life, including Life, risk, health and funeral will have on a homogeneous treatment compared to the current accounting standards. As to the ordinary management, we do not expect any relevant changes in our management. We'll continue to maintain our business indicator. You'll continue to see our growth in turnover and premiums and other KPIs that we are used to such as the combined ratio. And regarding financial investments, there are changes indeed, there are relevant changes. We already mentioned this, the mutual fund will go thirdly against the P&L. So they will introduce volatility. This is one of the reasons why we have proceeded to realize part of those. And in the case of variable income, they will be introduced complete -- any movement will be introduced in the P&L, but not in the time of realization. And the truth is that this new regulation is new for all participants in the market. And as already happened with previous accounting changes, such as the accounting plan for insurance companies of 2008. We will provide more detail in future presentations actually in parallel during the coming months, the Investor Relations department together with the accounting department for support will organize a session for analysts and investors with the aim of facilitating this transition.

The next question reads. First of all, congratulations on the results with an increase in the consolidated and attributed result of almost 16% and 14%, respectively, have you planned any changes in the dividend policy? Do you plan to maintain your efforts in growing inorganically?

As you very well know, the group has a conservative but growing dividend policy we have shown our strong commitment to the shareholders over the years because if in an exceptional situation such as the 2008 crisis and more recently, the 2020 crisis, we maintained or we basically or particularly maintain the level of dividends. With this growing policy, the dividend has increased by 80.4% in the past 10 years and in terms of dividend per share and 8.6% in the past year. And the Board yesterday approved to propose a complementary dividend to the AGM above -- around 10% if we are correctly, above the previous one. We will continue with our conservative dividend payout policy, thanks to these and the trust of our shareholders. In the past few years, we've been able to make several acquisitions without the need for financing, such as the one we just mentioned the Mémora Group. You know that all acquisitions consume part of the capital, consume a significant part of the capital and this has an impact on the solvency ratio of the group. Actually, the estimated year-end solvency ratio that we mentioned, 140%. Well, we've estimated it's the impact of the acquisition of Mémora, although it happened after year-end. And we can tell you that we will continue with the solvency ratio, which will be very robust 20 percentage points. above 240%, which means to 120%. So 2x above the minimum required by the legislation. And with that, well, you know our track record. We will continue to pay attention to the market, to pay attention to opportunities that may arise, bearing in mind that the macro situation that we are seeing, or we trust that new transaction, new opportunities will come up new M&A and corporate transaction opportunities. And through this that this is also one of the reasons why as you very well know because it was sold to the financial press. On January 1, 2023, we restructured the Management Committee of the group, incorporating an additional general management, the general management for strategy and business development.

And just to finish, we are pulling together the questions for the CEO. At the beginning of the presentation, the CEO told us about the change of brand, the integration of the traditional business companies and the volunteer dismissal plan. Would you be able to give us more information about this? What motivates this decision? What efficiency improvement should we expect?

Well, what we can foresee that will happen throughout the year, the merger of the traditional business companies in ICEA foresee because we are pending the authorization of the regulator. But we can plan -- is the combination of a process that started years ago with the unification of different platforms, technology, area centers for claim processing or contact centers that have provided service to the companies that will now merge. Subsequently, we integrate product -- integrated product platforms and the corporate areas. So it is a process that we have taken quite slowly. And as a conclusion of the process, we think it makes sense to change the brand. We could have used one of the existing brands, but we believe it is time to evolve. The integration process also offers the possibility to improve the future efficiency of the group. And in this sense, we will have this, as I said, voluntary dismissal program, but it will be a generous one. So we expect a high level of addition. And in the end, we want to have a simpler more agile and flexible and streamlined organization that I'm sure will better adapt to future challenges, which are quite many. Thank you very much.

And with this answer, we will conclude the presentation of results of 2022. We would like to thank Hugo Serra Calderon, Carlos Gonzalez for their presentations and answers to the questions received. I would like to remind you that, as usual, the question spending will be managed directly to the Investor Relations team over the coming years. And I would like to use this opportunity to invite you to the next presentation of results, which will take place on Thursday, 20th of April of 2023, presenting the results of the first quarter of the year. And finally, I remind you that you can visit our website, where you have all of the financial and sustainability information available. As always, we would like to thank you for your attention and participation, and see you soon.